Home
Open Access

Research on World Agricultural Economy

PDF

Issue

Volume 7 Issue 3 (September 2026)

Section

Article

How to Cite

Loading...

Digital Infrastructure as Catalyst for Agricultural Financial Inclusion: South Asian Evidence (2000–2024)

DOI: https://doi.org/10.36956/rwae.v7i3.105511

Received: 12 December 2025 | Revised: 6 January 2026 | Accepted: 12 January 2026 | Published Online: 27 August 2026

Copyright © 2026 Xianghua Tang, Yasmin Bani, Abdul Rahim Abdul Samad, Saifuzzaman Ibrahim. Published by Nan Yang Academy of Sciences Pte. Ltd.

Creative Commons LicenseThis is an open access article under the Creative Commons Attribution-NonCommercial 4.0 International (CC BY-NC 4.0) License.

Abstract

There are still 719 million people living in absolute poverty worldwide, and they account for 64% of the total number of people engaged in agriculture. Based on this, this paper examines whether there is a “threshold effect” in the moderating mechanism of digital infrastructure on the effectiveness of microfinance in alleviating poverty among farmers by employing Dynamic Common Correlated Effects estimation based on panel data of 148 observations from six South Asian countries (2000–2024). We found three key “activation thresholds”: when the proportion of internet users in the population is lower than 8%, microfinance has little effect on reducing poverty; when it reaches 20%, microfinance shows some effectiveness in promoting development; once this ratio increases further to 65%, microfinance will produce a “multiplicative effect.” The interaction term coefficient (−0.0428) at the 1% significance level indicates that every time internet users increase by 10% points, microfinance’s ability to alleviate poverty will be enhanced by 4.28% points.The results show that there exist two thresholds. First, if a community already has some existing microloans but no Internet access yet (below the first threshold), adding new microloans will have no additional effects on reducing poverty. Second, once Internet access reaches a certain level (above the second threshold), adding more microloans would further decrease poverty, i.e., there is a super-additive effect between microloans and Internet access.

Keywords: Digital Financial Inclusion, Poverty Alleviation, Technology-Finance Synergetic Effect, Threshold Effect, Sustainable Development Goals (SDGs)

References

[1]World Bank, 2024. Poverty and Inequality Platform Database. World Bank: Washington, DC, USA.

[2]Food and Agriculture Organization (FAO), 2024. Rural Livelihoods and Agricultural Development Database. FAO: Rome, Italy.

[3]World Bank, 2024. World Development Indicators 2024. World Bank: Washington, DC, USA.

[4]MIX Market, 2024. Global Microfinance Database 2024. MIX Market: London, UK.

[5]Sa-Dhan South Asia Microfinance Network, 2024. The Bharat Microfinance Report 2024. Sa-Dhan: New Delhi, India.

[6]Ajaj, R., 2025. Examining microfinance and financial inclusion nexus in poverty alleviation and sustainable development in Sub-Saharan Africa. Journal of Cleaner Production. 520, 146135.

[7]International Telecommunication Union (ITU), 2024. World Telecommunication/ICT Indicators Database. ITU: Geneva, Switzerland.

[8]Bangladesh Bank, 2024. Mobile Financial Services Statistics 2024. Bangladesh Bank: Dhaka, Bangladesh.

[9]Heeks, R., 1999. Information and Communication Technologies, Poverty and Development. SSRN Electronic Journal. DOI: https://doi.org/10.2139/ssrn.3477770

[10]Yılmaz, R., Koyuncu, J.Y., 2018. The contribution of ICT to poverty reduction: A panel data evidence. Social Sciences Research Journal. 7(4), 63–75.

[11]Islam, A., 2015. Heterogeneous effects of microcredit: Evidence from large-scale programs in Bangladesh. Journal of Asian Economics. 37, 48–58. DOI: https://doi.org/10.1016/j.asieco.2015.01.003

[12]Banerjee, A., Duflo, E., Glennerster, R., et al., 2015. The Miracle of Microfinance? Evidence from a Randomized Evaluation. American Economic Journal: Applied Economics. 7(1), 22–53. DOI: https://doi.org/10.1257/app.20130533

[13]Rogers, E.M., 2003. Diffusion of Innovations, 5th ed. Free Press: New York, NY, USA.

[14]McKinsey & Company, 2021. The COVID-19 Recovery Will Be Digital: A Plan for the First 90 Days. McKinsey Global Institute: New York, NY, USA.

[15]McKinnon, R.I., 1973. Money and Capital in Economic Development. Brookings Institution: Washington, DC, USA.

[16]Shaw, E.S., 1973. Financial Deepening in Economic Development. Oxford University Press: Oxford, UK.

[17]Food and Agriculture Organization (FAO), 2023. The State of Food Security and Nutrition in the World 2023. FAO: Rome, Italy.

[18]Dercon, S. (Ed.), 2004. Risk, Insurance, and Poverty: A Review. In Insurance Against Poverty. Oxford University Press: Oxford, UK. pp. 9–37. DOI: https://doi.org/10.1093/0199276838.003.0002

[19]Shapiro, C., Varian, H.R., 1998. Information Rules: A Strategic Guide to the Network Economy. Harvard Business School Press: Cambridge, MA, USA.

[20]Katz, M.L., Shapiro, C., 1985. Network externalities, competition, and compatibility. American Economic Review. 75(3), 424–440.

[21]Nakasone, E., Torero, M., Minten, B., 2014. The Power of Information: The ICT Revolution in Agricultural Development. Annual Review of Resource Economics. 6(1), 533–550. DOI: https://doi.org/10.1146/annurev-resource-100913-012714

[22]Kraay, A., 2006. When is growth pro-poor? Evidence from a panel of countries. Journal of Development Economics. 80(1), 198–227. DOI: https://doi.org/10.1016/j.jdeveco.2005.02.004

[23]Dollar, D., Kraay, A., 2002. Spreading the Wealth. Foreign Affairs. 81(1), 120. DOI: https://doi.org/10.2307/20033007

[24]Besley, T., Burgess, R., 2003. Halving Global Poverty. Journal of Economic Perspectives. 17(3), 3–22. DOI: https://doi.org/10.1257/089533003769204335

[25]Assefa, E., Hermes, N., Meesters, A., 2013. Competition and the performance of microfinance institutions. Applied Financial Economics. 23(9), 767–782. DOI: https://doi.org/10.1080/09603107.2012.754541

[26]Hermes, N., 2014. Does microfinance affect income inequality? Applied Economics. 46(9), 1021–1034. DOI: https://doi.org/10.1080/00036846.2013.864039

[27]Mader, P., 2013. Rise and Fall of Microfinance in India: The Andhra Pradesh Crisis in Perspective. Strategic Change. 22(1–2), 47–66. DOI: https://doi.org/10.1002/jsc.1921

[28]Lapukeni, A.F., 2015. Financial inclusion and the impact of ICT: An overview. American Journal of Economics. 5(5), 495–500.

[29]Björkegren, D., Grissen, D., 2020. Behavior Revealed in Mobile Phone Usage Predicts Credit Repayment. The World Bank Economic Review. 34(3), 618–634. DOI: https://doi.org/10.1093/wber/lhz006

[30]Sulhan, 2025. The Role of Microfinance Institutions in Promoting Financial Inclusion and Reducing Poverty among Smallholder Farmers in Rural Agricultural Areas. Journal of Information Systems Engineering and Management. 10(46s), 275–284. DOI: https://doi.org/10.52783/jisem.v10i46s.8806

[31]Yang, C., Liu, W., Zhou, J., 2024. The Role of Digital Finance in Shaping Agricultural Economic Resilience: Evidence from Machine Learning. Agriculture. 14(10), 1834. DOI: https://doi.org/10.3390/agriculture14101834

[32]Xu, M., Shi, L., Zhao, J., et al., 2025. Achieving agricultural sustainability: Analyzing the impact of digital financial inclusion on agricultural green total factor productivity. Frontiers in Sustainable Food Systems. 8, 1515207. DOI: https://doi.org/10.3389/fsufs.2024.1515207

[33]Mushtaq, R., Bruneau, C., 2019. Microfinance, financial inclusion and ICT: Implications for poverty and inequality. Technology in Society. 59, 101154. DOI: https://doi.org/10.1016/j.techsoc.2019.101154

[34]Shen, Y., Hu, G., 2024. How does digital inclusive finance improve rural economic resilience? Evidence from China. Digital Economy and Sustainable Development. 2(1), 12. DOI: https://doi.org/10.1007/s44265-024-00035-4

[35]Chudik, A., Pesaran, M.H., 2015. Common correlated effects estimation of heterogeneous dynamic panel data models with weakly exogenous regressors. Journal of Econometrics. 188(2), 393–420. DOI: https://doi.org/10.1016/j.jeconom.2015.03.007

Online ISSN: 2737-4777, Print ISSN: 2737-4785, Published by Nan Yang Academy of Sciences Pte. Ltd.